Danske Bank Tier 2 Capital

Transcription

1 Danske Bank Tier 2 Capital Henrik Ramlau-Hansen CFO & Member of the Executive Board Steen Blaafalk Head of Treasury Global Conference Call 23 September 2013

2 Agenda Financial results 3 Capital, liquidity & funding 9 New issue

3 Net profit: Increase of 61% under difficult market conditions Income statement (DKK m) H H Index Net interest income 10,956 11, Net fee income 4,470 4, Net trading income 3,929 6, Other income Net income from insurance business Total income 20,003 23, Expenses 11,918 12, Profit before loan imp. charges 8,085 11, Loan impairment charges 2,383 4, Profit before tax, core 5,702 6, Profit before tax, Non-core ,406 - Profit before tax 4,893 4, Tax 1,237 1, Profit 3,656 2,

4 Income: Personal & Business Banking stable; Danske Capital up Income breakdown (DKK m) H H Personal Banking ,233 Business Banking ,983 Corporates & Institutions 4, Danske Capital Danica* * Net income. 4

5 Impairments: Sharp decline across the board Loan impairment charges (DKK bn) Loan impairment charges, (DKK bn) H Impairments Loan loss ratio* (rhs) H Personal Banking 1, Business Banking Corporates 536 & Institutions 311 Non-core Q Q2 09 Q2 10 Q2 11 Q Q * The loan loss ratio is defined as the Group s annualised quarterly impairments as a percentage of loans and guarantees. 5

6 Earnings: Personal Banking and Business Banking triple Profit before tax (DKK m ) H H Personal Banking 338 1,100 Business Banking 865 2,277 Corporates & Institutions 1, Danske Capital Danica

7 Outlook for 2013 Strategy Implementation of New Standards proceeding according to plan Financial results Net profit of DKK bn Income Total income expected below 2012 level Expenses Expenses likely below the 2012 level Impairments Impairment level well below

8 Financial results 3 Capital, liquidity & funding 9 New issue

9 Capital: Strong build-up through the crises Capital ratios, under CRD/Basel II (%) Tier Core Tier 1 +72% H1-13 9

10 Capital: Ratios remain high after FSA orders; solid buffer Effect of FSA orders on capital base* (%) Total capital ratio Tier 1 ratio (including state hybrid) Core tier 1 ratio Effect of FSA orders on individual solvency need (DKK bn) Capital buffer Individual solvency needed 0% Q2 13 Q2 13 incl. orders Q2 13 Q2 13 incl. orders * CRD/Basel II. 10

11 SIFI proposal: 2022 requirements broadly in line with our capital targets Capital composition, 2022 (% of RWA) Capital base vs. capital targets, (% of RWA) Crisis management buffer Proforma Q2 13 capital ratios incl. orders Target CT1 ratio Target total capital ratio SIFI 1.5 CRD SIFI CRD4 7.0 CT1 AT1/T2 COCO Total capital CT1 Total capital 11

12 Liquidity and funding: Strong, stable liquidity position 12-month liquidity,* end of period (DKK bn) Key points, end Q2 13 Q Q1 13 Q month liquidity of more than DKK 250 bn Liquidity buffer of DKK 479 bn, with most of the bonds central bank eligible LCR** at end-h1 of 132% DKK 19 bn in funding raised in H1 2013: 48% covered bonds 52% senior debt 0 3 mos 6 mos 9 mos 12 mos Maturing funding (DKK bn) Long-term funding ex RD (DKK bn) Subordinated T2 Senior Hybrid T1 Covered bonds Completed YTD Funding plan H H * Moody s Financial Strength. Main assumptions: No access to capital markets; no refinancing of debt to credit institutions, issued bonds or subordinated capital; moderate reduction of business activities. ** LCR includes holdings of covered bonds and Danish mortgage bonds, including own issued bonds. 12

13 Financial results 3 Capital, liquidity & funding 9 New issue

14 Danske Bank Tender Offer and Issue of T2 18 September: Tender Offer for USD 1bn Subordinated Fixed Resettable Notes due 2037, with purchase price of to existing holders. 23 September: To issue Tier 2 capital in the form of a bond loan denominated in EUR. Minimum size EUR 500 million, maturity 10 years, option to prepay at par after five years. S&P publish revised methodology 16 July 2013 Launch Tender 18 Sep Launch Tier 2 23 Sept Bookbuilding and Pricing Announce Tender result 2 Oct Announcement of exercise of call Expected 18 Oct Danske Bank announce potential variation 17 July Danske Bank announce intent to call and vary terms 18 Sep Closing of Tender 1 Oct Settlement on Tender 4 Oct End 2013 Clean up call of RAC Tier 2 at par on or around 18 Nov 14

15 New issue Terms & Conditions Issuer Issuer Ratings Expected Instrument Ratings Description Status of the Notes Danske Bank A/S Baa1 (Stable) / A- (Stable) / A (Stable) (Moody s / S&P / Fitch) BBB- / A- (S&P / Fitch) Maturity October 2023 Step-up Call Date Coupon structure Deferral of Interest Loss Absorption EUR (benchmark) Dated Subordinated Fixed Rate Resettable Tier 2 Notes (the Notes ) CRD IV Compliant Tier 2 Capital. The Notes will on issue constitute Tier 2 Capital of the Issuer The Notes will constitute direct, unsecured and subordinated obligations of the Issuer, rank pari passu without any preference among themselves, pari passu with Tier 2 Capital of the Issuer (including the existing subordinated capital), junior to other unsubordinated creditors and senior to all classes of share capital and obligations ranking or expressed to rank junior to the Notes None October 2018 at par [ ]% fixed payable annually to Call Date Resets at Call Date to prevailing EUR 5-year Mid-Swap Rate + margin None The Notes include a write-down loss absorption feature (in respect of principal and unpaid interest) as required under the current Danish capital adequacy rules. The write-down feature may only be used after (i) the equity capital of the Issuer has been lost, (ii) a general meeting effectively resolved to reduce the share capital to zero, and (iii) provided that following such action either, sufficient new capital is raised so as to enable the Issuer to comply with the capital requirement under the Danish Financial Business Act or the Issuer discontinues its business without a loss to its non-subordinated creditors Such write-down may only occur following a write-down of Tier 1 Capital Reduction Event will only apply until (but excluding) 1 January 2014 or, if later, the date on which none of the Existing Tier 2 Capital Notes is outstanding Optional Redemption following a Special Event Listing The Issuer may redeem the Notes at par at any time in case of a Tax Event (additional amounts or loss of deductibility) or a Capital Event (full or partial exclusion from Tier 2 Capital (to the extend not prohibited by the Relevant Rules), Irish Stock Exchange 15

16 New issue Terms & Conditions PONV Cross Default Negative Pledge Substitution and Variation Law Denominations Selling restrictions The Notes may be subject to statutory provisions as applicable from time to time that could lead to the write down and/or conversion to ordinary shares of the Issuer of the Outstanding Principal Amounts of the Notes, as further described in the Risk Factors. None None None The Notes will be governed by, and construed in accordance with, English law, except for certain Conditions, which will be under Danish Law (Status, Reduction of Amount, Early Redemption for Special Events, Enforcement) The Notes will be issued in the denominations of EUR 100k and integral multiples of EUR 1k in excess thereof up to (and including) EUR 199k For a description of additional restrictions on offers, sales and deliveries of the Notes and on the distribution of offering material in the United States of America, the United Kingdom and Denmark, see Prospectus 16

17 Financial results for the first half of 2013 Disclaimer Important Notice This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Danske Bank A/S in any jurisdiction, including the United States, or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The securities referred to herein have not been, and will not be, registered under the Securities Act of 1933, as amended ( Securities Act ), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. This presentation contains forward-looking statements that reflect management s current views with respect to certain future events and potential financial performance. Although Danske Bank believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors many of which are beyond Danske Bank s control. This presentation does not imply that Danske Bank has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided. 17